Sydney has just experienced one of the most encouraging starts to a selling season in years, driven by what every buyer’s agent wants to see – a rise in buyer sentiment.
In other words, increasing numbers of people are ready to buy. Listings are also up by just under a third (27.7%) on the same time last year. This was evident right from the get-go when the first day of auction season clocked in as the second busiest since 2008. The following Saturday, those headed to auctions across Sydney had just over 10% more properties to choose from than the week before.

Agents report buyers having more enthusiasm, too, a ‘different energy’ running through their crowds of auction attendees. This was particularly evident last Saturday after the reassuring effect of the Reserve Bank of Australia’s decision to hold rates the previous Tuesday. It’s not only good times for Sydney either: the overall capital city clearance rate last weekend rose to 76.2% - the highest preliminary clearance rate since the first week of June 2023 according to CoreLogic data.

Borrowing power up
Economic factors of course are shaping this positive buyer sentiment, led by the pending stage three tax cuts. These will not only make it easier for consumers to pay their mortgages but also give them the ability to borrow substantially higher sums. Those earning $100,000 for example will be able to borrow around $21,000 more than before the stage three cuts; those on $150,000, about $37,000 more, and those on $200,000, a handy $45,000 above their previous $951,000 threshold. (How The New Stage 3 Tax Cuts Boost Your Borrowing Power (homeloanexperts.com.au)

“This is such good news for buyer’s agents,” said Rose Buyers Agents CEO Simon Rose. “We really need to embrace rising buyer sentiment by guiding people in their renewed enthusiasm. It’s time to work hard as we really want to make the most of the fact there will be increasing numbers of potential buyers entering the market over coming months, both those who are ready and willing to jump in with both feet and those who’ve been sitting on the sidelines due to interest rate rises but can now be converted from observers into genuine buyers.”

Downsides and upsides
Be mindful of the fact however that despite the increase in borrowing power, borrowers will still have to prove they can service a loan 3% higher than the current home loan rate as per rules laid down by the country’s banking regulator, the Australian Prudential Regulation Authority (APRA). There’s also the big question mark over interest rates – some economists saying the first cut could be as early as June, others pushing out the chances of a fall in rates as far as next February.

Another influencing factor to bear in mind concerns the investors among our clients. No doubt they will be getting nervous hearing all this talk about scrapping negative gearing. While no-one can predict what Treasurer Jim Chalmers will do when he hands down the federal budget on May 14, the school of thought is that if the government can change its mind on pre-election promises about tax, then why not negative gearing? We hope this does not occur. Slashing negative gearing will the hurt middle class more than the truly wealthy, borne out in ATO figures that show of the 70% of Australians owning one investment property, only 10% are in the top marginal tax bracket. We can always look to the past and hope: when the Labor government did away with negative gearing in the mid-1980s, it was reinstated just two years later after rents headed skywards. Equality Rights Alliance - FutureTax - Statements from Participants (treasury.gov.au)